Expert Answer :Discuss the resource dependence paradigm/perspecti


Solved by verified expert:Read carefully: YOU MUST ANSWER THIS USING THE DOCUMENT IN THE UPLOADED FILE ONLY. NO OUTSIDE RESOURCES! Answer the following question:Discuss the resource dependence paradigm/perspective and its application to organizational theory. Be sure to complete this entire reading below before beginning your written assignment. Answer the question above as completely as possible. At a minimum, three or four well-developed paragraphs. Put in your own words, do not copy merely from the reading material. No outside sources! Your answer must convey understanding of the reading material given the uploaded file below (pg. 163 through 169) ONLY! When discussing the topic CITE properly, the page numbers are given (for example: Tolbert & Hall, pg. “…”)

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Answer the following question:

Discuss the resource dependence paradigm/perspective and its application to
organizational theory.
Be sure to complete this entire reading below before beginning your written assignment. Answer
the question as completely as possible. At a minimum, three or four well-developed paragraphs.
Your answer must convey your understanding of the reading material given below (pg.
163 through 169) ONLY!
Cite properly, the page numbers are given (for example: Tolbert & Hall, pg. “…”)
Here is the reading located below to answer the above question:
By: Pamela Tolbert & Richard Hall
As noted, work on inter-organizational relations provided an important foundation for the
development of another major paradigm, known as resource dependence theory. Evan’s (1966)
work on inter-organizational sets, which we described in the previous chapter, articulated some
of the key arguments of resource dependence, as did an early analysis by Thompson and
McEwen (1958) discussing the process of goal setting in organizations. In general, the resource
dependence theory closely reflects the influence of the decision-making analyses of Herbert
Simon and other members of the Carnegie School. However, the development of the basic logic
of this paradigm (and the assignment of the label, “resource dependence,” to it) is identified
primarily with two main theorists: Jeffrey Pfeffer and Gerald Salancik (1978).
Key arguments of the resource dependence paradigm reflect two main assumptions about forces
that drive organizational activities. The first is that organizations seek to ensure access to a stable
flow of resources. That no organization is totally self-sustaining, a point underscored by Pfeffer
and Salancik (1978:2), appears to be axiomatic. Even organizations that seem completely selfcontained, such as isolated monasteries or agricultural communes, require some critical resources
from outside their boundaries—new members, metal tools, even prosaic goods like salt and other
materials necessary for the group’s survival and functioning. In order to ensure orderly
operations, then, organizations must have access to those resources, either from individuals
outside a focal organization or, more often, from other organizations. This means that all
organizations must deal with resource dependencies.
A second key assumption that is underscored particularly in the forerunning work by Thompson
and McEwen (1958) and Evan (1966) is that organizational decision-makers seek to maximize
their autonomy. If an organization is to pursue its interests effectively (however those interests
are defined), decision-makers need freedom to operate, to take whatever actions necessary for
attaining specified ends. But dependencies on other individuals and groups for resources pose a
threat to this autonomy because resource providers may withhold or threaten to withhold their
exchanges if they are unhappy with organizational decisions. These sorts of considerations make
power a key issue for decision-makers. Resource dependence, then, draws attention to power
motives in explaining organizations’ actions. Following Emerson (1962), power is treated as a
property of an exchange relationship, rather than a general characteristic of an actor (including
organizational actors). As noted in other readings, we can talk about A’s power vis-à-vis B but
not about the absolute power of A (i.e., without reference to a given partner). Given these
assumptions, a resource dependence paradigm focuses attention on power in dyadic exchange
relations involving key resources and on different strategies that organizations may use to
manage power relations.
Note that concerns with ensuring stable resource flows and with ensuring decision-making
autonomy may sometimes lead to conflicting choices. For example, establishing long-term
contracts with a given supplier might guarantee a stable flow of resources, but this would limit
the organization’s ability to find and establish relationships with other suppliers who might
provide a better deal. The choice of strategies, therefore, presumably reflects consideration of
possible trade-offs between these two concerns.
Strategies for managing resource dependencies can be classified into two broad categories. One
category involves actions that an organization can take independently, without securing the
cooperation of a given exchange partner or set of partners. Thompson (1967:19) described a
number of such actions an organization could take to, in his words, “seal off their core
technologies from environmental influences.” We refer to these as autonomous strategies, and
they include buffering, smoothing, forecasting, and rationing. The other broad category of
strategies involves establishing ties to other organizations that provide resources to a focal
organization; thus, we refer to these as interorganizational strategies. These ties vary in the level
of resource commitments an organization must make and in the length of time that the
commitment entails; they include contracts, co-optation, coalitions (or strategic alliances), and
Autonomous Strategies
Buffering refers to arrangements that allow an organization to absorb the effects of changes in
resource flows, without necessarily trying to shape the flows directly (Thompson, 1967:20). On
the input side, this involves stockpiling resources—obtaining resources when they are plentiful
and relatively cheap and storing them for future use. So, for example, biodiesel fuel producers
may purchase corn or soy products when there is a large supply of these and then store them for
conversion into fuel at a later time point. Another, more subtle illustration of this scenario is
when organizations provide managerial training for more employees than the number of open
managerial positions or the numbers that are likely to be open in the near future; that way, the
organization has a ready supply of management candidates available when positions do become
open. On the output side, a buffering strategy takes the form of warehousing—storing goods that
have been produced for exchange at a later time. Carpet manufacturers, for example, make
different types of carpeting and store them so that they can be shipped when ordered by
customers. The practice in some universities of hiring their own Ph.D. students who did not find
a job in a given year as temporary lecturers could also be viewed as a form of this strategy. The
effectiveness of buffering strategies depends largely on the degree to which the resources
involved are subject to becoming obsolete or unusable over time. If demands for a resource
change quickly—products go out of style or technology changes so that different types of
resources are needed—organizations may end up holding resources that they can’t use.
Smoothing strategies (sometimes called leveling) entail practices that are designed to reduce
variability in resource flows directly, rather than simply adapting to such variations, as in
buffering (Thompson, 1967:21). These strategies often are aimed at variations in flows on the
input side. An administratively oriented form of this involves scheduling. Thus, for example,
medical clinics normally reserve some time slots and assign nonemergency patients to these;
another example is the assignment of days and times to students for online enrollment. Both of
these arrangements have the same goal: an orderly flow of resources (people, in these cases)
through the organizational system. Smoothing can also take a market-oriented form, usually
involving inducements to encourage transactions at particular times. Commuter railroads
commonly offer off-peak rates (lower prices for travel in the middle of the business day, or on
weekends); airlines offer lower fares during periods when fewer people are apt to travel; stores
offer mid-January sales, when consumers are less likely to be in a buying mood. You could also
think of organizations’ offers of early-retirement packages to their employees in this light; this
can be a way to encourage the regular flow of personnel through the organization. The
effectiveness of this strategy depends to a large degree on whether the demand for the resources
is elastic (using economists’ terminology)—whether consumers and suppliers can and are willing
to wait to transact with the organization. To give an obvious (if slightly dark) illustration of
inelastic demand: patients who need pacemakers will not wait for a sale.
A third type of autonomous strategy that organizations may use is forecasting (Thompson,
1967:21). Like buffering, forecasting does not involve efforts to alter the flow of resources but
does involve active monitoring of changes in flows and adaptation by the organization in
response to expected changes. One prosaic example of this is the practice in many grocery stores
of stocking more canned pumpkin in the late fall and early winter than in the spring or summer;
they forecast that increased demand for this resource will occur around the holidays and lessened
demand in summer months. Similarly, some hotels in resort areas open up in the late spring and
summer (or late fall and winter, in skiing areas) and shut down in the opposite seasons, again
based on expectations of changes in the flow of customers. This strategy can be effective when
changes in flows are predictable and orderly; when changes are random (e.g., based on fads),
forecasting is clearly not of much use to organizations—although, despite norms of rationality
(Thompson’s favorite caveat), they may still try to use it.
And a final type of autonomous strategy is rationing (Thompson, 1967:23). This entails coping
with uncertainty over the demand for a good or service produced by the organization by limiting
its provision; the goal here is to minimize excess production of resources. One example of this
strategy is provided by book publishers: when printing a book by an unknown author, publishers
often make first runs fairly small. If the book is successful, more copies can be produced, but a
smaller number of initial printings helps reduce “remainders” on the shelves at bookstores.
Another example is provided by free legal services clinics, where the number of staff members is
usually low; when there are more clients than counselors available, the clients simply have to
wait. This strategy is effective primarily when the organization is the sole producer or in a
position of monopoly or near-monopoly control. Since this often holds for public service
agencies, it is not uncommon for such organizations to use this strategy. This condition holds
less often for business organizations; by limiting production, businesses may run the risk of
losing transactions to others who produce the same or substitutable goods and services. (In
publishing, organizations enter into contracts with authors for copyright, which effectively gives
these organizations a sort of monopoly power, at least for some specified period of time.)
Interorganizational Strategies
Buffering, smoothing, forecasting, and rationing may help minimize dependence on other
organizations and thus maintain autonomy in decision-making, but they are not always adequate
to ensure stable resource flows to an organization. Consequently, organizations frequently pursue
interorganizational strategies to deal with this issue. The use of such strategies is the major focus
of contemporary research conducted under the banner of resource dependence (see Pfeffer and
Salancik, 1978, for a summary of much of this research), which has investigated a number of
different types, including bargaining, co-optation, strategic alliances, and mergers. As we’ll
discuss in another section of this chapter, where we describe the transaction cost paradigm, the
first and last of these strategies—bargaining and mergers—have also been of central concern.
Bargaining refers to the establishment of formal but relatively short-term exchange agreements
with another organization (Thompson and McEwen, 1958). There are abundant examples of this
strategy: a company enters into an agreement with a union to pay a specified wage for labor for a
specified period of time; one firm agrees to buy a given quantity of some good from another
firm; an organization rents space from another organization for a defined leasing period, and so
on. Such exchange relationships are not necessarily limited to monetary transactions. For
example, in one case that we’re familiar with, a nonprofit agency that provides workforce
training for the unemployed entered into an agreement with a local bank, permitting the latter to
use its computer facilities for training bank employees, in exchange for allowing some of the
nonprofit’s clients to receive the training. This strategy goes beyond a pure market relationship,
that is, one where the exchanges are immediate and involve no ongoing relation, but not much. It
does secure a flow of resources to an organization but only for a limited period of time; on the
other hand, it also entails little or no threat to its decision-making autonomy, since once the
exchange agreement is up, a focal organization may simply choose not to renew it.
The second form of interorganizational strategy, co-optation, involves bringing representatives
of another organization that provides (or can provide) important resources into the decisionmaking structure of a focal organization. Often, this involves appointments to the board of
directors of an organization, as exemplified in the case of Chrysler automobile company, which,
in the early 1980s, took the unprecedented step of appointing the president of the United Auto
Workers union, Douglas Fraser, to its board. Similarly, examination of the board of trustees of
most business schools will also illustrate this strategy: most, if not all, have individuals from
large corporations or important local employers represented on their board.
As we noted, when we discussed work on interlocking directorates, interlocks sometimes have
been viewed as co-optative devices, a way of securing commitments from key resourceproviding organizations. Thus, cooptation was commonly offered as an explanation for why
banks and other financial institutions were so often selected to be on other organizations’ boards
throughout most of the twentieth century (Mizruchi, 2004). Creating ties to other organizations
this way can help an organization ensure a flow of resources in a number of ways (Perrow, 1961;
Pfeffer, 1972; Pfeffer and Salancik, 1978). First, it provides a channel of communication that can
be important in facilitating resource exchanges. For example, a board member who is employed
by a bank that is considering changes in its loan policies may convey this information to
members of a focal organization during a board meeting; that may affect the focal organization’s
ability to prepare for these changes to make sure it can obtain needed loans. Second, when a
member of one organization is appointed to the board of another, she or he may feel an
obligation to help direct resources to the latter. Thus, representatives of large corporations who
sit on university boards of trustees are apt to help direct the donations of their corporation to the
university. And finally, having representatives of other, powerful organizations on an
organization’s board can help provide it with legitimacy, and this can increase support not only
from the organization represented on the board but from others as well. Hence, a new
organization formed to lobby for regulations involving environmental issues might put a member
of the Audubon Society or Sierra Club on its board to help legitimate itself with possible donors;
such legitimacy is likely to affect individuals’ and organizations’ willingness to provide
donations and support to the new organization (Meyer and Rowan, 1977; Zucker, 1986).
Pg. 166
However, this strategy also poses a much greater threat to a focal organization’s decision-making
autonomy than bargaining, since resource providers are in a direct position to shape decision
outcomes. A prime example of this is provided by Selznick’s (1966) now-classic study of the
Tennessee Valley Authority (TVA). The Tennessee Valley Authority Act was passed by the U.S.
Congress in 1933 with the aim of helping southern farmers who had been especially hard-hit by
the Great Depression, by providing electric power to the region, manufacturing cheap fertilizers,
and providing other forms of support for agricultural production. One of the mandates of the Act
was that the organization created to operate these projects be democratic by having local
organizations and citizens participate in its decision-making processes. Doing this could be
viewed as a co-optative process, whereby the organization gained political support from local
constituents. As Selznick’s account underscores, however, co-optation is a two-way process. He
documents how the TVA ended up largely representing the interests of the wealthier farmers in
the area (who were active members of the local organizations from which the TVA recruited
participants), rather than the truly economically disadvantaged ones, whom it was presumably
intended to help the most. The inherent threats to autonomy associated with this strategy suggest
that it is more likely to be used by organizations that are relatively weaker— where the need to
ensure resource flows outweighs the potential costs of loss of autonomy. This is consistent with
findings from research by Davis (1996), showing that less than 5 percent of large corporations
had representatives of firms that served as key buyers or suppliers to the corporation on their
boards; large corporations presumably have sufficient resource flows to make the potential costs
of co-optation efforts not worth paying.
A third strategy, which is broadly referred to as coalition (Thompson and McEwen, 1958),
involves the commitment of resources by two or more organizations to some relatively long-term
joint activities. Our use of the term coalition, then, encompasses arrangements that go under an
array of labels: joint ventures, alliances (or strategic alliances), and joint programs (Child, 2005).
One example of the use of this strategy is provided by the hybrid electric vehicle (HEV) project
that was begun in 1993 with financial support from General Motors (GM), Ford, DaimlerChrysler (then Chrysler), and the Department of Energy’s National Renewable Energy
Laboratory (NREL). The project’s purpose was to conduct research leading to the production of
a market-ready hybrid vehicle in a decade
( Although the ultimate goal is still being
pursued, the contributing firms all were able to make use of the research findings from the
project. Another example of a coalitional strategy is provided by the Inter-University Consortium
for Political and Social Research (ICPSR), which is a data archive (a place where researchers can
find data sets to use in research) that is headquartered at the University of Michigan. This
organization is supported by a large number of academic organizations, whose faculty and
students are given the rights to use the data and resources of the organization. Still another
example is represented by Butachimie, an organization that manufactures a chemical used by two
competing chemical companies, DuPont and Rhône-Poulenc Rorer. Although competitors, the
companies cooperated in forming Butachimie to serve as a supplier for both companies (Child,
These kinds of arrangements help participating organizations secure resources that they may
need in the present, or that they anticipate needing in the future, …
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